Bankruptcy Alternatives There are two main options that we would suggest before choosing a bankruptcy:
1. Debt Consolidation
2. Debt Negotiation
There are essentially 2 types of bankruptcies you can file:
Chapter 7 and Chapter 13. The purpose of bankruptcy is: 1. To provide relief when you cannot pay your debts
2. To return as much money as possible to your creditors
There are several steps involved with declaring bankruptcy.
1. You may want an attorney because legal paperwork must be filed in federal bankruptcy court. It is not mandatory but having the assistance of an expert may be very valuable.
2. You need to be aware of the filing fee (approximately $130), the administrative fee (approximately $30), and the attorney's fee (variable).
3. You must determine the type of bankruptcy you can file. There are primarily two types of personal bankruptcy available to a consumer: Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy A Chapter 7 bankruptcy gives you a clean slate. This means that many of your unsecured debts are discharged, and you don't have to repay them. But you maintain responsibility for your secured debt if it is considered exempt, like mortgage. A court-appointed trustee generally sells non-exempt property, such as real estate or personal property of value, and the proceeds are used to pay your creditors.
Chapter 7 does not eliminate: 1. Government student loans
2. Taxes
3. Fraudulently created debts
4. Alimony
5. Child support
You will continue to be responsible for these debts, even after you file a Chapter 7 bankruptcy.
Chapter 13 Bankruptcy A Chapter 13 bankruptcy, gives you some help with your unsecured debt. When you file Chapter 13, the courts appoint a trustee who is responsible for summarizing all of your debts into a payment plan you can afford. The trustee allocates your monthly income to your creditors.
When you may apply for this type of bankruptcy: 1. A regular source of income
2. Less than $250,000 in unsecured debt and less than $750,000 in secured debt
In Chapter 13 your debts are not discharged and you keep your property.
The Impact of Bankruptcy 1. Bankruptcy can stay on your credit report for up to 10 years
2. You may have difficulty re-establishing credit
3. You may have difficulty renting or buying a home for several years
4. Your debts can only be discharged once every six years under
The Final Decision You may have other options that will work for your situation - make sure you explore them all. Making the decision to declare personal bankruptcy is not one to be taken lightly and should be considered as a last resort.
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